Usually the bastion of real estate investment has been only for the extremely wealthy. It takes a great deal of capital after all. The development of crowd-funding however, has changed the game and is rattling capital creation, the distribution and access in many industries.
With so many bad deals after the economic downturn in real estate, a revitalization in the industry was greatly needed. But the popular explosion of crowd-funding along with real estate restrictions vanishing, the development of marketing is now awarding a much broader pool for investors to take the leap to diversity.
Up to 2013, SEC regulations prevented real estate development from marketing investment opportunities. The use of “general solicitation” and advertising was restricted in investment opportunities. Since the JOBS Act was implemented, past restrictions have been lifted and cleared the way for real estate crowd-fund development, meaning a more diversified pool of investors now have the chance to play in the real estate field.
Fund-rise is one of the first of crowd-funded real estate investment sites. A champion of the JOBS Act, they took advantage of the loophole of Regulation A, and allowed local investors to add to real estate development that would likely patronize.
Proposed rules under the SEC states that unaccredited investors, and online crowd-funding deals have to be governed with a broker or funding portal. Those individuals who have an annual income or a net worth $100,000 or less would be limited in a 12-month period of individual investments. Individuals with an annual income or a net worth of $100,000 or more, the individual investments would be confined to 10% of that annual income and cap at $100,000 within a 12-month period.
With the rules in place under the JOBS Act, small business have no limit when acquiring money from accredited individual investors within a 12-months. However, companies can compile a maximum amount of $1 million from investors who are non-accredited.
Fund-rise works by creating a company that buys and develops real estate using crowd-sourced funds. Investors can invest in the local project directly or join a network of local investors. The fund-rise site also features private offerings for the accredited investors. Defined as those with capital of at least $1 million, or earn $200,000 per year. Investing in Fund-rise requires a minimum investment of only $100.
So what is Fund-rise edge over its competitors? The key point to Crowd-funded real estate is that it changes the neighborhood trajectory. It is a mechanism that changes what gets built. Fund-rise is a company that lets people invest in the community, while also earning a profit and being socially involved. The platform empowers new investors to invest directly for the first time and cuts out the middleman. This in return reduces fees and allows for increased returns.
Fund-rise competitors deal with a different type of investor and usually require a higher fee, oftentimes at a greater risk. Take a quick look at other crowd-funding platforms.
Prodigy Network another early player in crowd-funding, the company works differently than Fund-rise. International investors and accredited U.S. investors are allowed to buy shares of a Real Estate Participation. The investment is usually for a specific project and are put into escrow until the project is fully funded.
Once funded, development begins when the funds are released. The overall goal is for the investor to see returns. Depending of the development these returns can in the form of hotel fees or rent. The minimum investment for a project is expensive and will generally be $100,000 or more per project.
Realty Mogul requires a $5000 minimum investment and allows its investors to choose from pre-vetted opportunities. Focused mainly on apartments, single family, and mobile homes. The list to choose must be developments that meet viability standards set by Realty Mogul. Every investment is connected to a company that covers the management of the designated property. Many opportunities allow entry level investors to participate in buying and renovating a building without the need for actual construction or renovation experience.
Realty Shares is a crowd-funding platform intended to invest $1.5 million when it launched. The site allows accredited investors to buy shares in private real estate investments for as little as $5,000. Interest in the platform has been diligent with investors. Realty Shares has successfully funded five investments across three states during its public beta.
iFunding projects are focused on commercial real-estate projects, all produce income, and institutional opportunities with sound returns. Fund-rise has been in news outlets for involving its local community in its new construction projects. A minimum investment of $1,000 is required iFunding opportunities.
When looking at all crowd-funding platforms the best investment for your pocket is Fund-rise. They are community focused and allow new investors to active in their local community, and build a sustainable property in their own neighborhood.